main_musicians_online_earnings

How Much Do Music Artists Earn Online?

Tuesday, April 13th, 2010

Recently, the UK government passed The Digital Economy Act which included many, perhaps draconian, measures to combat online music piracy (including withdrawing broadband access for persistent pirates).

Much was proclaimed about how these new laws would protect musicians and artists revenue and livelihoods.

But how much money do musicians really get paid in this new digital marketplace?

How Much Do Music Artists Really Earn Online?

This image is based on an excellent post at The Cynical Musician called The Paradise That Should Have Been about pitiful digital royalties. (Thanks to Neilon for pointing that out). I’ve taken his calculations and added a few more.

As ever, this was incredibly difficult to research. Industry figures are hard to get hold of. Some are even secret. Last.Fm’s royalty and payment system is beyond comprehension. (If you can explain it to me, please get in touch)

Note: these figures do not include publishing royalties (paid to composers of songs). The full spreadsheet of data does though. You can see all the numbers and sources here:http://bit.ly/DigitalRoyalty

If you have any experiences, data or royalty statements to share, please post below!


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Show Comments ( )

  • http://www.mikelaurie.com/ Mike

    Hi, this is really great, thanks for taking the time to put this together. And thanks for sharing your workings.

    A couple of points though:

    – It’s a bit odd comparing Spotify to US minimum wage as it’s not even available in that country yet. The markets that it currently operates are tiny. Right now it doesn’t have a great deal of money to share with artists.
    – It’s good to see iTunes in there, however, what about services like Reverb Nation that allow you to have your music for a fixed fee i.e. $50 and then Apple takes 70%. Not sure on the exact figures or actually how to do the maths but it seems like a good option for artists to be able to compare.

    Thanks again,

    Mike.

  • http://www.dorianmoore.com/ Dorian Moore

    Comparing sales to plays is a bit apples to oranges, isn’t it? Would have been intereting to see how royalties from

    Radio Play
    TV Play
    Advertisment Placement
    Movie placement
    Videogame Placement

    compared to last.fm/spotify etc., as these are more comparable than record sales.

  • http://thinkingdan.blogspot.com Daniel Lawson

    This comparison is interesting but doesn’t seem quite fair – to start with, single songs are compared with albums, which means there is a factor of 10 missing in that comparison “per unit effort”. Similarly, the comparison assumes a months wage: how many tracks should reasonably be produced by a musician working for a month at a reasonable rate (e.g. a 35 hour week)? The online music pricing structure aught to take this into account by scaling according to the number of new tracks produced by a band per month. Finally, plays per month is a strange concept compared to cd sales and needs some type of scaling, maybe based on the median plays per month on the respective services.

    All this would produce a fairer comparison of what is really earned via the different services that should show what a “median” band needs to do to make a living assuming they work hard. Of course, it will likely show the same trends: 1.5 million plays a month for last.fm is absurd – large bands such as Bon Jovi have only 22 million plays (total? I couldn’t tell either), and regionally successful bands are in in the 100 thousand range.

  • http://spotinews.wordpress.com/ JB

    It’s interesting to note that regular radio would place well below Spotify in this type of comparison and yet you never hear anyone complaining about regular radio and how bad it is for the artists. Why is that?

    @Daniel Lawson: Most of the scrobbled plays in last.fm comes from pirated mp3s. So the actual number of pure last.fm streams are way, way lower.

    • charley

      There’s huge difference between the benefits of radio and spotify. Radio encourages people to physically or digitally buy the record or at least it used to because the track is only played a few times per day and is not available to be played at will like it is on spotify. Because of the nature of spotify and it’s instant access to tracks it doesn’t encourage sales in the same way. There is also a large publishing payment with every radio play. If streaming is going to be the future of the industry then the business model is going to have to change because it just doesn’t provide enough revenue for artist or label to survive.

      • Katina

        I completely agree.
        Imagine the world in 10 years or even 5 when the 3G and WiFi net coverage is good enough for everyone to use a streaming service like spotify on a daily basis.
        Only a small percentage will buy mp3s and physicals (if they even still exist) because you have got the convenience to listen to any track you want for £9 a month.
        This system has to change since it will make it extremely hard to make a living as a musician.
        Sure some will receive publishing royalties mainly from synchronisation and live, plus income from concerts but there is only so much you can charge fans to see artists live.
        The mainstream musician at least has got the brand endorsement schemes.
        There may not be an indie scene and we might be stuck with mainstream artists.

  • Derek

    What about:

    Tshirts & other merchandise
    VIP memberships that offer greater access to the musicians in some way

    and if the musicians are working hard they should be earning money offline by playing live shows.

    Focusing only on the songs themselves is deceptive since the music has always been something of a loss leader for the musicians. The only people who ever got rich from selling albums and singles were record company executives.

  • Stumble

    @JB – what do you mean by “regular radio”?

    In artist royalty terms, one play on a late night BBC radio show can be worth thousands of plays on Spotify.

    • JJ Rockford

      Yes, but you probably reach thousands of listeners on BBC as well, right? :)

      So, if you think you reach one million listeners via BBC, you should compare the royality from that to 1 million plays on Spotify.

      • charley

        It’s not the same at all, although it is the most common argument used to defend spotify’s criminally low royalties.

  • Ted Strobman

    Cry me a river. Maybe we should start paying more money to people that matter, like police, firefighters, and teachers.
    When did the jester become more valued than the king?

    • Katina

      So are you saying we don’t need musicians?
      Would you want to live in a world without good music that puts a smile on your face, that completely takes hold of you and inspires you?

      Music can help depressed people and ones that suffer from burnout syndrome when nothing else works.

      The music market also accounts for thousands of jobs that make,promote and market music.

  • zota

    And the royalties for one play on a major commercial radio broadcaster in America would be… nothing. There are no performance royalties for terrestrial radio at all. Which is why all recorded music died after the birth of FM radio. Oh wait. No it didn’t.

    But to be fair, could we add an infinity-sized circle to this chart to signify broadcast radio?

  • mike

    There is extra social security tax on the earned revenue from selling CD that your employer pays making minimum wage at a job… so really you would have to add an extra 15% to your totals to make it a fair comparison.

  • http://www.whereismysong.net Olivier R.

    Well, at least, nice pink graphs are talking, even if you could discuss all night long the facts : you can’t make it through pre-recorded music anymore, although at more than 1 000 000 plays / month (to say the least), one could eat some cheap meals every now and then…

    Play it live or be dead, guys ?
    What is the value of recorded music in a digital world ?
    Almost nothing.

    Nice terrifying pink charts, now form a band and find some gigs.

    • http://oolong.co.uk Fergus Ray Murray

      When you say ‘you can’t make it through pre-recorded music anymore’ I feel like that’s misleading on two fronts: one, people still do; two, it was only ever a tiny minority of musicians that were ever able to scrape a living this way.

  • http://www.tudumo.com Richard

    If you considered the effort in self-printing an album, downloads start to look pretty good! Also, compare mp3′s with iTunes to a high-end retail deal. It would take about 2k downloads and 1k album CD’s. If you had two songs on each album that were worth buying, you could say they were equivalent. I’d suggest listeners would prefer to spend 2 bucks on those songs rather than 10, so you might more easily get those sales. And you never have to worry about dealing with all the hassles that a high-end deal would come with.

  • http://www.tudumo.com Richard

    (And you’d have to record fewer songs, since you don’t need as much album-filler.)

  • http://thecynicalmusician.com Krzysztof Wiszniewsk

    Since I guess I am to blame for taking up the subject in the first place on The Cynical Musician, I’ll try to answer some of the issues brought up in the comments.

    1. I originally chose the US minimum wage as something that most of my readers could relate to. It does result in some issues, such as when comparing it to Spotify (though I personally did not use that example), but I think the message is powerful nonetheless (and not very flattering to the new services).

    2. How much you receive from digital channels will depend on your distributor. However, the headline rate for iTunes, for instance, is 70 cents (that’s after Apple’s cut). In other words, you’ll get that much or slightly less.

    3. The focus on recorded music may be objectionable to some, but as I had originally written, the delivery direct to fan was to be the major victory for artists as Internet connections became powerful enough. My point was that rather than the Internet enabling more artists to make more money, we’ve seen the trend towards enabling more artists to make less money.

    4. The comparison between single songs and albums may seem strange, however note that what we’re looking at is number of transactions. This also allows us to compare streams to downloads. The key question is how many transactions you need under a given model to achieve the same financial result. By the same token, plays per month may seem like a strange figure, but what it really shows is how much volume of activity is required in a given period of time.

    5. Notice that all of these are artist-to-fan (or B2C) channels and all of them are – to an extent – substitutes. If, for instance, streaming becomes just as convenient as owning a copy of the recording, people may switch to streaming completely. The above charts illustrate what that’ll mean for recording artists. On the other hand radio, sync, endorsments and the like are artist-to-business (B2B) channels – a whole different ball game. Terrestial radio never was a primary business model for the music industry because the revenues from airplay are totally beyond the control of the industry – not to mention the fact that US terrestial radio doesn’t pay performance royalties at all.

    6. There are of course other ways for the musician to earn a living – plumbing, for instance, pays well I am told. Also needless to say, that in the real world the working musician will be getting revenues from a number of sources. What these numbers do illustrate, however, is the possible future of recorded music if this trend continues. The important implication is that while recording an album makes sense if you know you need to sell, say, up to a thousand units to break even – at recording costs of $8,000 and an $8 margin on self-released CDs, one starts to question the feasibility of spending the same money if you’d need millions of streams to make it back.

    I don’t expect that anyone here is a friend of the major labels and we should realize that as things are going, the situation favours them more than ever. The greater the volume of transactions are needed to secure a minimum income, the more the small players (independent labels and artists) are going to get cut from the loop.

    It wasn’t supposed to be like that.

  • n0npr0phet

    Poop poor rock stars and their poor poor record labels. Why don’t they drive clunkers and eat hot pockets? Why are these multinational corporations super rich? Something fishy here.

  • http://www.thebizmo.com David Gjester

    Just a comment to the poster Mike. Apple does NOT take 70%. They pay out roughly speaking 70 cents per .99 cent download. The artists we distribute to iTunes make more per download than ANY major label artist ever will and are happy for it. However its a volume game and 100 downloads will not pay the bill no matter how high the royalties are.
    So you still need to be known and loved by a substantial amount of people before the fact that your song is “For sale on iTunes” is going to make a difference to your Wallet.

    • http://www.americansaresopoor.org Ha Ha!America= poor people

      @David Geister, I was going to say the same thing! And I’m not even IN the music biz but it’s just common sense that on 99 cents, the band would need to sell in the hundreds and hundreds of thousands to be able to even buy new equipment!

      So IMAGINE writers for ebook for Amazon Kindle. Musicians on itunes are doing better than they are because Amazon writers get THIRTY-FIVE CENTS for every 99 cent ebook they sell. Amazon takes SEVENTY PERCENT of the 99 cents. The wages are not sustainable for any industry. Creating art and entertainment is one thing, but being a slave to poor Americans is another. I like German and British people more because they are not poor like Americans, who are on the same financial level as Mexico and the continent of Africa.

  • Amber

    So much about these numbers seem off to me. For example, both examples of iTunes listed are very obviously not case studies of independent artists (where no percentage of royalties would go to a record label), yet here they are in comparison to your first example of a self-pressed CD. Set a controlled variable or standard and stick with it! Or, if you choose not to, reflect that difference in your graphic as well.

    Also, the advantage of releasing in a digital platform like iTunes is the lack of prints and advertising costs, not to mention distribution. Distributors are immediately reimbursed for their costs before skimming the remaining gross for overhead and profit. Self-pressed CDs would all still have the same expenses, one way or another.

  • http://www.citizensound.net citizensound

    Well, there may be adjustments to be made to some of the figures, but it does not take away from two facts:

    1 This is a powerful visual that simplifies so much debate in the music space. Thank you for doing it.
    2 It highlights the long established power of a direct relationship between fan and artist. The revenue per fan is clearly higher, the more direct the relationship is with the fan.

    The argument for an artist right now is about reaching new fans, more fans, online fans, other bands fans etc etc. Yet, too often the chase is on for transient fans…people who dip in and out of the ‘found’ music.

    Instead the focus should be on building long term relationships with those who have shown interest in the music – loyal fans, not transient ones.

    If the infographic had a longer time factor built in, we would note even more the power of the direct artist/fan relationship. The rise of house gigs for artists is one such trend towards ‘smaller is more rewarding’ – fewer fans, but more revenue in the short term, the longer term and more rewarding by building up a closeness to the fans.

    Strip away the ‘business’ of music, and the heart of it is simply musician and music lover. Cut out the rest and the musician has a better chance of securing a more rewarded life

  • Ones Self

    There seems to be some data or calculation error
    For Rhapsody Stream the artist gets $0.0022.
    For last.fm the artist gets $0.005. Which is more then double what s/he would make in Rhapsody. And yet the number of downloads the artist needs to achieve in the diagram under last.fm are almost double what Rhapsody is. So, either the number are reversed, or there’s a decimal point error in one of them.

  • http://blog.monstuff.com Julien Couvreur

    Good visualization. I agree with commenters above that comparing CD sales to tracks listened is somewhat misleading.

    From an economic point of view on the whole question of revenue for artists, it is rather ridiculous that we keep trying to protect revenues and livelihoods in such or such industry.

    There is no such thing as the “right” number of musicians, the “right” amount of content creation or the “right” revenue.
    Furthermore, it is absurd and impossible to maintain any status quo, as the world we live in keeps changing.

    Instead of clinging to some old business model, people need to find new ways of producing and monetizing value. It’s tough, but it’s reality.

  • joe

    would love to see how musicians make $$$ via publishing through sites like last.fm.

  • Steven Steve

    Yeah, the music industry was decimated by piracy, no question about it. Technology often disrupts industries, but it’s often for only a short period of time–in the long run, if customers value a product/service, the economics will always work out–eventually the technology will adapt and deliver.

    The problem with the music industry is the lack of enforcement of well-established copyright laws. There’s a reason Apple doesn’t care that much about piracy: as long as it’s the monopoly with iTunes and iPods, then it will make billions even if the music industry gets withered to one-third of what it used to be. With no competition, Apple has all the control over the battered labels: to wit, the iTunes pricing system. Apple knew the music industry would suffer, resulting in less quality, resulting in less demand for $15 albums, so it charges per song. Consumers like the $1 a song, but that’s because consumers like cheap and we like instant gratification (for example, pornography, Big Macs, etc.). Plus, consumers mistakenly compared this to cd prices instead of an alternative mp3 pricing system. If there were numerous competitors in addition to iTunes in the market, competition would have resulted in lower prices for consumers.

    The iTunes pricing model benefits Apple to the detriment of nearly everyone else. Thing is, consumers will still spend their money–someone will find a way to suck it out of them. Right now they merely spend less on the actual purchase of music and more on the products that deliver the discounted music. Like $400 cell phones (that really should cost $600 but are subsidized by the company that established the monopoly on the music industry). And $1,500 annual cell phone bills (that should really be $1,200 but they are more to pay for part of the discount consumers received when they got a $600 cell phone for $400. And $55 a month for broadband high-speed internet.

    So basically the end result is a huge loss for the music labels and artists and billions in profits for Apple, AT&T and high-speed internet providers like Time Warner.

    Fortunately for consumers, there are some big time players in the tech industry in the US, and history has shown that adaptation always prevails. Google and Microsoft know the game and can play it well. Amazon does too, especially considering it already controls the market for the content for books. Plus, the game will change again, and again and again.

    • Where the streets have no name

      @Steven, you are totally right. FINALLY, somebody ‘gets’ it. Apple is in the ‘device’ business. They are using musicians to make their own devices seem more alluring so people will spend hundreds of dollars on them. Without that music content, that particular device is nearly useless.

      Same with Amazon (as you mentioned them). It has dawned on me that they have been promising people in some way that if they buy a Kindle, all their ebooks will be free, or ‘nearly’ free. This is FALSE.

      Amazon I’d desperate to sell it’s Kindle devices, so IMO, they’ve basically lied to people to get their money. And the result of these lies falls back on the unsuspecting content creators-authors who are being confronted by Kindle consumers demanding that every book they produce be 99 cents. The Kindle consumers are angry, cheap, and hard to please…at such a low price point. It would be different if they were actually paying something, but for 35 cents, it’s not really worth the hassle.

      I wonder what musicians are going through with ‘their’ cheap customers. I’m not a musician or a writer but I have friends who write & sometimes I wonder exactly how low wages have to go (it’s already at 35 cents) before they get common sense and pull out. How poorly do their 35 cent-paying customers have to treat them before they find work that has a higher class of clientele & pays better, like begging strangers for money on the streets, working at McDonalds, 7-Eleven, or Taco Bell.

  • zota

    If no one has heard of you or heard your music no one is going to buy your music. This is one reason there are no performance royalties on radio. Record companies used to want people to hear an artist and thereby be motivated to purchase something scarce, like a disc or a shirt or a concert ticket. In fact, this is the reason for massive payola scandals — record companies would to actually bribe radio stations to distribute their music for free.

    Given the millions that media corporations still spend millions getting their music onto commercial radio, the (strangely omitted) pink dot for commercial broadcast radio should actually be negative.

  • http://www.reverbnation.com Jed Carlson

    @Mike,

    Just a small correction to the first comment in this thread:

    ReverbNation does charge a flat fee to get your music into places like iTunes, but iTunes only keeps 30% of the revenue from sales. YOU (the Artist or Label) gets 70%. ReverbNation doesn’t keep any of the money, we pass it all along to you.

    -Jed Carlson
    Co-Founder, COO
    ReverbNation.com

  • a poor musician

    I’m currently a musician self-publishing songs worldwide, with a number of albums available on ITunes as well as streaming-mp3 based sites. I’ve been doing this as a day job for about 2.5 years now.

    Just to clarify:
    I know the chart notes omitting this, but to the above posters: Musicians do technically earn a small royalty for radio play- assuming they are a member of a performing rights organization such as BMI/ASCAP. Radio stations purchase licenses from BMI, which in turn pay royalties to artists whose music is played.

    Secondly, it’s no secret that in the music business that no one gets rich from album sales. This is especially true for artists signed to traditional (aka the Big 4) labels. It’s called the recoup clause.

    However, as noted before- this chart strangely omits music released by independent artists.
    I recieve 99 cents (US) for every single I sell on ITunes. But on the other hand, I’d say that 75-80% of my revenue is through playing shows and selling merch.

    In any case, yes- the labels are screwing musicians over when it comes to electronic royalties. Why is anyone surprised?

    Dig the infographic though, thanks for pointing things out to people.

  • Jonny

    Our policemen don’t need anymore money, they can make up to $300,000 salaries and patrol cars are BMW. They’re doing just fine. But the police can’t pull you out of a self-absorbed depressive funk like a good musician can. If anything our teachers need more money.

  • LukeEcho

    Streaming rates are really more like ‘Radio Play’ than sales so the comparison there seems a bit skewed.

  • http://www.last.fm/user/Kirpus69 Kirpus

    As a last.fm subscriber who loves to listen to Last.fm radio stations I listen to a lot of tracks I’ve never purchased/downloaded or even heard before.

    My Question is: How many times do I have to listen to the same track to “pay” for the single?
    If I had to pay $0,99 up front to listen to a single song.. I’d be ruined within a week.

    Or should I just stick with my old CD’s and newer listen to a new song again?

  • cassiopeia

    i’m amazed that in all the comments here, no-one has really touched upon the fact that all of this is actually hugely unfair to the artist, on the simplest level, which is what this infographic illustrates- an album is (probably) a work of art, something they’ve worked hard on etc etc and it’s also, from a working point of view, the product of many many hours work spent writing and recording. And the ridiculous system we have at the moment doesn’t reward them for it. I know this is the way things have pretty much always been, to a lesser or greater extent, but it doesn’t mean it’s suddenly not that unfair to them.

  • Mark

    @a poor musician,

    You’re conflating composers with performers and calling them both “musicians”. Composers get paid through radio play, but performers do not. If you recorded a song written by someone else, you wouldn’t get any money if that song was played on the radio.

  • Diego

    First of all I wanted to say that I love your work and I follow your blog since quite a while.

    I have to say that even though I find this visualization quite interesting, I agree with Dorian. In order to compare Spotify and the likes with CDs, you HAVE to compare them to the estimated number of times those CDs are listened to (an information I am not sure if we have) otherwise the chart provides wrong information.

    I also partialy disagree with Krzysztof in his third point. I think that artists are making less money because labels are useless in a digital economy and in order to remain profitable they need to keep almost all the revenues.

    Now, what if Spotify allowed artists to upload their songs directly into the platform and paid them most of the revenues ? That is where we would see a real change. The thing is that as with the case of Spotify, labels have bought important parts of these companies and end up deciding who gets what.

    So in a few words, it would be nice to see this chart either taking into account the number of times a CD is played or creating a new one where online streaming is considered as a different medium.

    Keep the great work !
    Diego

  • HarkJohnny

    what about eMusic?

  • Ken

    Why not include radio, and an infinite circle? Please redraw using only data through purchases, and omit single-track sales, or multiplying by 10 or so to get the CD equivalent.

  • Davoloid

    One point that seems to have been missed is that big chunk of the last.fm demographic (see http://www.ignitesocialmedia.com/2009-social-network-analysis-report/#lastfm) are 25+ and have already got quite well established music tastes. Heavy users will have an extensive collection so for these people, any artist payments via Spotify & Last.fm are in addition to the original purchase back in the day.

    Secondly, they may already have probably converted their old CD’s to MP3 at some point in the last 10 years – this does not equate to pirated MP3s but may appear as such. Even if the MP3′s are pirated & swapped, studies show that these people are more likely to buy music outright anyway: http://news.cnet.com/2100-1023-898813.html

    For people that listen to a lot of music, especially obscure genres, Spotify & Last.fm are the natural progression from the mixtapes or CD compilations we used to share with our friends to discover new music. But now we can instantly share with a wider group of friends, browse their catalogues, find similar artists, explore their discography, and we can always buy the music for later consumption. All of this data can be tracked & shared with the labels and artists.

    And you don’t have to press play & record at the same time.

  • berth

    What about jamendo.com?

    It seems that the pay per listen model is almost a scam for artists

  • http://www.myspace.com/littleglitches pingu the peguin

    yep perhaps the biggest fear is that this is killing decent original new music and instead opening the door for xfactor style smaltz.

  • http://www.hurstpeacock.com Hurst Peacock

    To the person who stated above that labels are useless in a digital economy, I disagree.

    What’s going on right now business-wise is that digital recording and the the internet are doing exactly what they were billed to do: create an independent revolution. It’s just that the revolution entails some ramifications that people didn’t consider.

    You are correct in that it no longer takes a major label budget to record a great sounding album, so you don’t need the labels for that. You don’t need a label to get a video on MTV anymore, because YouTube is the new MTV & you can upload one for free. You don’t need a label to get you into record stores (there ARE no more record stores to speak of), because you can sell online.

    But if you want a decent chance to make any significant amount of money, you still need the record labels. Why?

    Well, first, let’s look at the iTunes model. The artists aren’t making money, you say. Is that really because the distributors are taking too big a bite? I say no. I say it’s because instead of an exclusive system in which only a few bands got into the portals to be able to sell a lot f records, now anyone has access and no one is selling much. Instead of 100 bands selling 5 million records per year each we now have 5,000,000 bands selling 100 records a year each.

    iTunes likes it—they make the same amount of money either way. They’re all for DIY.

    But think about it—how many acts can you think of that broke within the last 8 years or so (after the digital revolution got cranked up), that can sell millions of copies of a record OR sell out a large venue (for those of you who say that live music is the answer)? The only ones I can think of broke prior to the revolution.

    The labels are still useful because they can PROMOTE. Now, in the past, their choices of WHO to promote were often flawed and ridiculous, but when a label put resources into breaking an act, it more often than not was a successful venture. Yes, they screwed the artist in sales accountings, etc., but they made them into stars so that they could make money filling concert halls and selling merchandise. The current digital model doesn’t do that—whatever % iTunes takes is just for distribution, I don’t get any other benefits.

    And it’s fine and dandy to have the ability to distribute music everywhere online, but no one is going to buy it if they have never heard it, seen you in a magazine, on tv, something. There’s a psychological element involved—if anyone can do it, it must not be worth much. So now everyone”s a star, therefore, no one is.

    Anyway, I think the distribution models are fine, but the record labels need to adapt by becoming marketing/PR specialists. It’s the only thing that artists can’t do on their own now (I’m talking about real marketing, not begging 100 friends to come to a show or click on a YouTube video), and it is worth doing.

  • Steve

    @Mark: “You’re conflating composers with performers and calling them both “musicians”. Composers get paid through radio play, but performers do not. If you recorded a song written by someone else, you wouldn’t get any money if that song was played on the radio.”

    This is not correct. There’s a mechanical or performance royalty that gets paid for to the performer (or, depending on the deal, whoever owns the master recording). The “writer’s share” is a separate royalty. If you think about how many enormously popular songs were actually cover versions, you can see that this makes sense.

  • Steve

    Referring to the royalty payments as how much musicians “earn” and comparing it to wages is misleading. When working a minimum wage job, the costs to you are minimal: transportation, clean clothes, etc. But it costs a lot of money to produce that recording. Before you can even sell/play the first one, you have to pay for equipment, studio time, musicians, utilities and more. And then there’s duplication, which takes a chunk out of each physical unit sold. What this graphic is really showing is gross revenue, not earnings. The true picture is much worse than what you see here.

  • Bruce Warila

    This looks cool but… The premise of the graphic seems misleading to me. It’s more of the usual negative anti-future, anti-music-tech stuff you see all over blogs that are patrolled by retired record label dudes.

    If you are getting 4,000,000 plays a month on Spotify, you are selling a boatload of other stuff that generates a truckload of additional income. I don’t know a single independent artist that would not be satisfied with 4,000,000 plays a month on Spotify. No really.

    My friend Krzysztof would like to bomb the earth back to vinyl records, but there are many, many artists now that are far better off than they were five years ago.

    The graphic would be complete (but still misleading) if you added Bit Torrent activity to break minimum wage. Oh yeah, that activity doesn’t lead to revenue – according to the RIAA :)

  • http://jodywhitesides.com Jody Whitesides

    First off, I took a look at the spread sheet – it contains some errors in relation to the Publisher/Writer values – at least for the U.S. It’s not a percentage of the sale, it’s supposed to be a set amount. You have it set for 9.1% The current statutory rate is $0.091 in the U.S. Of that 50% goes to the Publisher(s) and 50% goes to the Writer(s). When it comes to streaming – there’s a different rate and it’s based on the service and gets very convoluted.

    @Steve is making a mistake in thinking that there is a mechanical royalty for a performance. There isn’t, mechanical royalties are only based on sales, not performances. In the U.S. unlike most other countries in the world – There is no performance royalty for the performer. Not yet. There has been legislation working it’s way thru congress to change that, but so far it has not become law yet. U.S. Broadcasters are fighting it tooth and nail – often calling it’s a tax [which it most certainly isn't].

    Nearly every other country in the world including the U.K. pays a performance royalty to the performer. Which is how it should be.

    The fact that the U.S. does not, means that U.S. performers don’t get a performance royalty from overseas broadcasting. But likewise foreign performers don’t get a performance royalty from the U.S. Thus foreign markets withhold U.S. performers royalties from U.S. performers. The U.S. needs to come in line so that all it’s fair across the board for the performer.

    Then again, it’s amazing to think that people really are fighting to get the fame, cause it sure isn’t about the money, not from sales anyway. The current money is in licensing for the right to use music. Sadly that’s not a set amount. It’s usually based more on the popularity of a song or artist. The popular it is, the more money it can command.

  • Markus

    @berth: jamendo is mostly CreativeCommons (for non commercial use) and special negotiated for (each) commercial use between artist and user.

    For the retail audio CD (high end deal) the number should actually be 1,160 (if the royalties are $1 each), I’d say.

    About last.fm — they won’t offer their own streaming on demand any longer, but rather rely on other services.

    Spotify got me a little shocked. Would have been interesting to see imeem in there. I guess the numbers would be quite the same as with spotify.

    Otherwise: Good and creative work as ever.

  • http://www.nimbit.com Scott Feldman

    This is an impressive illustration of the power of Direct-to-Fan. The closer you are to the people buying/sharing/listening to your music, the better your odds of creating a relationship with that fan, and yeah, making money. Fan relationships can lead to anything — including, but definitely not limited to, sales.

    Here at Nimbit we encourage our artists to create a Direct-to-Fan presence everywhere from our single, integrated platform while keeping the core value proposition strong: Connect with Fans, Provide Reasons to Buy, and continue building, monetizing, and succeeding.

    I welcome the opportunity to discuss the principles of Direct-to-Fan and how Nimbit can help you earn more than $0.0009 from your music. Thanks to the folks at Information is Beautiful for creating such a stunning representation!

    Scott Feldman
    Director of Marketing – Nimbit
    sfeldman@nimbit.com

    http://www.nimbit.com

  • Ricardo

    @Diego

    But that’s where the problem with this infograph lies, isn’t it? I doubt such a thing as representative album play statistics exist especially because it wouldn’t be of much use for music labels. The crucial aspect behind the major label business model is still album sales, which is their major source of revenue. Once a copy is sold, there is no further revenue to be gained so it matters little to a label if a copy is played til the laser burns a hole on it or gets turned into a drinks coaster after a couple of plays once the consumer notices he/she bought a 12 track dud with only one decent tune. So how do you equate album sales with how often a consumer comes back and listens to that same album? Poorly, if at all. How does this fit into a business model that relies increasingly on hype and heavy marketing at the expense of quality and long term appeal? Clearly it doesn’t. Music streaming is in its very early days, it’s all up for grabs and that sort of the data just isn’t there yet. Personally, I support the idea that artists are right to fight for their revenue and that labels are facing redundancy but right now any direct comparison between music sales and streaming is an exercise in misinformation.

  • Mark

    To those who make the “apples to oranges” argument, what you are missing is the fact that on demand on line streaming is a substitute for owning a record collection. Why should I buy all those Miles Davis records when i can turn on my Miles Davis Radio Station on Pandora. Public performance royalties used to augment record sales or you could argue that record sales augment public performance royalties. However, when the sales of music go away, which is exactly what is happening, nothing is left but public performance royalties and as the numbers demonstrate, they are not sufficient. We all need to put our heads together and try to work through this to arrive at a system that will allow quality musicians to make a living wage. If the future Miles Davis or John Lennon is faced with the choice of making music and having his child starve or selling insurance and allowing the child to live, we will all be without their music and poorer for it.

  • http://www.disrupsean.com Sean Savage

    This infoviz is a great start but, as other commenters pointed out, it has a central fatal flaw: an apples-to-oranges comparison. The central part of the infoviz is the central pink circle, which falsely represents plays as album purchases (or vice-versa, depending on how you (mis)read it).

    How to fix it? Weight the apples to make them similar to the oranges… A crude but relatively easy way to do this: estimate how many times an average consumer listens to the average track on an album in the month after they buy it. Then multiply that figure, by the album sales figures, by the average number of tracks per album.

    Interesting data though, thanks!

    As for the commenters complaining that we shouldn’t feel bad for all the “rich rock stars” while other people in society are poor – you need to look at the real data. The vast majority of musicians don’t get rich from their art, in fact the majority of them don’t make minimum wage, and they have to take on completely unrelated jobs, in addition to working crazy long hours as a musician, to make ends meet. Don’t make the mistake of judging musicians overall based on the 1 of every 10,000(?) who make it big and appear all over the mainstream media living the good life.

  • http://www.empiresofsteel.com Brit

    There’s an interesting “NPR Planet Money” podcast that was just released the other day. They talk to a member of OK Go about the music business. Interestingly, he talked about how the music industry has to take most of the money from the sale of each album in order to fund the large number of bands that they sign, but go nowhere. 19 out of every 20 bands fail to turn a profit. When that 1 out of 20 makes a profit, the music industry takes the lion-share of it – which most people see as unfair, but given the situation – they have to. While he had mixed feelings about the music industry, he did say that they did help fund new bands – and there was a certain amount of value in that. Also, even if bands don’t make most of the money from record sales, they’ve essentially worked out a deal where the record company helps make them famous (which means more money in concerts), while the record company gets a lot of the actual music sales. All in all, it’s entirely possible that a band gets 0% of every record sale, but they’re still better off signing with a record label because of the fame that comes with it. In some sense, you can look at it as “selling off the rights to make money from record sales in order to boost the band’s fame so that they can make money from concerts”.

  • Working musician

    Dear Mr. Ted Strobman,

    As of tomorrow, you will no longer receive a paycheck but are expected to be here working. We will be increasing your hours due to more responsibilities up to seven days a week, up to 16 hour days. You will no longer have a vacation, you won’t be able to afford one anyway, and you won’t have any medical insurance.
    If you have a problem with this you can speak to cassiopeia, maybe she can knock some sense into your idiotic skull.

  • Conor

    Your graph is highly misleading and really biased against the internet in an unfair way. Looking at your spreadsheet, let’s run through an honest comparison by following an independent artist and actually try to equate the numbers.

    Self pressed CD: 143 (assuming ten dollars per album)
    Cdbaby: 155
    Amazon/apple: 2661.5, but wait, that’s per track. Let’s assume an artist makes a good album with ten songs then our per album. Then the number changes to 266 which basically means he needs to sell about 2 fold over a self pressed CD. Also, this assumes that he doesn’t do something like host and paypal the song himself like some artists do. If he were to do that, then all he would pay would be bandwidth and paypal costs which would probably put him below self-pressed CD rates.
    Rhapsody: 127,473 plays. Which assuming each person who would buy a CD instead listens to to a CD worth of songs ten times (A somewhat small number considering my own habits but whatever) then he needs an actual CD audience (who will listen for free) of 1274.
    Last.fm free: 332,000 Which assuming each person who would buy a CD instead listens to a CD worth of songs ten times then he needs an actual CD audience (who will listen for free) of 3320.

    The others exist as well, but I will cheat and focus on these because my point is more clear this way. I assume this artist is producing quality on all his tracks and didn’t have filler on his CD. If he did, then he’s lazy and was ripping people off with his CD anyway. So, putting a track up on amazon or itunes means he only needs twice the audience to get the same profit. If he self hosts (no harder then CD printing), he probably needs about the same audience. But, on the internet he is benefiting from ease of access. By putting it up on Rhapsody, he needs a ten-fold audience increase, but they are all listening for free. Increasing to ten-fold Rhapsody listeners over paying general audience listeners might not be possible, I don’t know how big Rhapsody is. If he is on last.fm he needs a 20 fold over paying listeners, but they are getting his songs for free at all times. Is it possible to get 20 fold? Maybe, it’s hard to say. This is biased but you get my point.

    TL;DR Your analysis is misleading. You are comparing several different services and for internet sources you only use label artists.

  • Drakar

    The idea that artists automatically deserve “compensation” for online radio plays (let alone regular radio plays) is a bit of a laugh. I know there’s an argument for being a “free content provider” or whatever, but before Pandora was forced to start paying artists, and therefore slamming users with ads or subscription fees, they were nothing more than FREE ADVERTISING for every band they played. That’s right, free advertising. Since that’s what airplay IS. Of course the record companies had to poke their evil heads into this paradise and ass it all up.

    In a similar vein, if any band thinks they will get rich (or even make a living) simply from digital downloads, unless they are already independently famous (or a fluke youtube sensation), they are living in a fantasy. The ultimate goal of any musician looking to make a real living in this economy should be to get as many copies of their songs onto as many ipods as possible, and of course the best way of doing this is FREE. It costs artists essentially nothing to get their music into the eager hands of thousands if they have even a grain of talent and fanbase. Their last.fm counts will increase, more people will pay attention to their website, and will buy posters or t-shirts, and most importantly, will turn up at a live gig. I personally tend to buy physical copies of albums I’ve gotten for free previously, especially when the free download was also a legal and/or artist-endorsed one.

    The funny part is right before I found this post I was reading something related over at QuestionCopyright (an article called “the cobbler”); at least some people are starting to wake up and realize the dying “record company” system makes no sense whatsoever when they try to use the cut-and-paste approach for how to deal with Internet economics.

  • http://parseerror.com/ Ryan Flynn

    Interesting concept, but I didn’t think it was as clear as it could have been and I think the enormous pink circles wasted too much space. A good infographic uses images to increase information density, not decrease it. I’ve made an that is denser, and uses a time-based statistic (in pink) instead of the circles. Let me know what you think.